Page 511 - SAIT Compendium 2016 Volume1

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VALUE-ADDED TAX ACT 89 OF 1991 s 18
promulgation of this Act or for a purpose in respect of which a deduction of input tax in respect of such goods or services would have been denied in terms of section 17 (2) if that section had been applicable prior to the commencement date; or
[Para. (a) amended by s. 34 (c) of Act 27 of 1997.]
(b) (i) goods or services have been supplied to or imported by a person on or after the commencement date and tax has been charged in
respect of such supply or importation; or
[Sub-para. (i) substituted by s. 18 (a) of Act 20 of 1994.] (ii)goods have been manufactured, assembled, constructed or produced by him on or after the commencement date and tax has been charged in respect of the supply of goods or services acquired by him for the purpose of such manufacturing, assembling, construction or
production; or
[Sub-para. (ii) substituted by s. 18 (a) of Act 20 of 1994.] (iii) goods or services are deemed by subsection (1)
or section 8 (2) to have been supplied by him,
[Sub-para. (iii) substituted by s. 18 (a) of Act 20 of 1994.] and no deduction has been made in terms of section 16 (3) in respect of or in relation to such goods or services; or
[Para. (b) amended by s. 34 (d) of Act 27 of 1997.]
(c) second-hand goods situated in the Republic have been supplied (otherwise than under a taxable supply) to a person under a sale on or after the commencement date by a resident of the Republic and no deduction has been made in terms of section 16 (3) in respect of
such second-hand goods; and
[Para. (c) inserted by s. 18 (c) of Act 20 of 1994.]
such goods or services are subsequent to the
commencement date applied in any tax period by that person or, where he is a member of a partnership, by the partnership, wholly or partly for consumption, use or supply in the course of making taxable supplies (other than taxable supplies in respect of which, if such goods or services had been acquired at the time of such application, a deduction of input tax would have been denied in terms of section 17 (2)), those goods or services shall be deemed to be supplied in that tax period to that person or the partnership, as the case may be, and the Commissioner shall allow that person or the partnership, as the case may be, to make a deduction in terms of section 16 (3) of an amount determined in accordance with the formula
A 3 B 3 C 3 D,
in which formula—
‘A’ represents the tax fraction; ‘B’ represents the lesser of—
(i) the adjusted cost (including any tax forming part of such adjusted cost) to the vendor of the acquisition, manufacture, construction or production of those goods or services: Provided that where the goods or services were acquired under a supply in respect of which the consideration in money was in terms of section 10 (4) deemed to be the open market value of the supply, the adjusted cost of those goods or services shall be deemed to include such open market value to the extent that it exceeds the consideration in money for that supply; or
[Sub-para. (i) substituted by s. 32 (a) of Act 97 of 1993 and by s. 174 (b) of Act 45 of 2003.]
(ii) the open market value of the supply of those goods or services at the time when the supply is deemed to be made;
[De nition of symbol ‘(B)’ amended by s. 112 (1) of Act 60 of 2008 and by s. 123 (1) of Act 7 of 2010.]
‘C’ represents the ratio that, immediately after the supply so deemed to be made, the intended use of the goods or services (as contemplated in section 17 (1)) in the course of making taxable supplies (other than taxable supplies in respect of which, if such goods or services had been acquired at the time of such application, a deduction of input tax would have been denied in terms of section 17 (2)) bears to the total intended use of those goods or services, expressed as a percentage: Provided that where the intended use of goods or services in the course of making taxable supplies (other than taxable supplies in respect of which, if such goods or services had been acquired at the time of such application, a deduction of input tax would have been denied in terms of section 17 (2)) is equal to not less than 95 per cent of the total intended use of such goods or services, such percentage shall be deemed to be 100 per cent; and
[De nition of symbol ‘C’ amended by s. 89 of Act 53 of 1999.]
‘D’ where paragraph (c) applies, represents the ratio that the amount paid, which payment reduces or discharages any obligation (whether an existing obligation or an obligation which will arise in the future) in respect of or consequent upon, whether directly or indirectly, the consideration in money for the supply of second-hand goods, bears to the total consideration in money, expressed as a percentage:
[De nition of symbol ‘D’ substituted by s. 93 of Act 30 of 1998 and by s. 138 (1) of Act 24 of 2011 – date of commencement: 10 January 2012. This substitution applies in respect of supplies made on or after that date.]
Provided that—
(i) paragraph (b) of this subsection shall not apply where a
vendor has, only as a result of not complying with the provisions of section 16 (2), not been entitled to make a deduction of input tax in terms of section 16 (3);
(ii) and (iii) ....
[Paras. (ii) and (iii) deleted by s. 149 (1) (a) of Act 22 of
2012 – date of commencement deemed to have been 10 January 2012. The deletion of the paragraphs applies in respect of supplies made on or after that date.]
(iv) this subsection shall not apply where a constitutional institution listed in Schedule 1 or a public entity listed in Part A or C of Schedule 3 to the Public Finance Management Act, 1999 (Act 1 of 1999), is re-classi ed within the Schedules to the Public Finance Management Act, 1999 (Act 1 of 1999) and applies those goods or services for the purposes of consumption, use or supply in the course of making taxable supplies; or
[Para. (iv) added by s. 103 (1) (c) of Act 32 of 2004.]
(v) this subsection shall not apply where a municipality applies goods or services acquired before 1 July 2006 for the purposes of consumption, use or supply in the course
of making taxable supplies on or after 1 July 2006.
[Para. (v) added by s. 49 (1) (d) of Act 9 of 2006.]
[Sub-s. (4) amended by s. 32 (d) of Act 136 of 1991, by GN 2695 of 8 November 1991, by s. 23 (b) of Act 136 of 1992, by s. 18 (d), (e), (f) and (g) of Act 20 of 1994 and by s. 34 (e) and (f) of Act 27 of 1997.]
(5) Where—
(a) capital goods or services have been supplied to or
imported by a vendor; or
SAIT CompendIum oF TAx LegISLATIon VoLume 1
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VALUE-ADDED TAX ACT